Hilton Hotels Corp. announced Thursday it is selling up to 10 Hilton-brand hotels in Europe to a fund managed by Morgan Stanley Real Estate for €566 million ($770 million).
The properties involved in the transaction include Hiltons in Germany, France, Switzerland, Belgium, Spain and Luxembourg. Hilton, Beverly Hills (California), announced plans to sell the hotels last summer, as part of a broader strategy to bring its European operations more in line with those in the US and Canada. Hilton and Morgan Stanley have agreed to long-term management contracts on five of the 10 hotels, and similar arrangements are expected to be established at three others. Hilton's move to retain management contracts is in line with the US lodging-industry trend that has seen Hilton and rivals Marriott International Inc. and Starwood Hotels & Resorts Worldwide Inc. sell hotels to real-estate concerns and then focus on generating income from management fees. The sale of seven of the hotels is subject to a number of conditions including clearance from the European Union regulators, but is expected to be completed by the end of June. The sales of the remaining three hotels - those in Paris Charles de Gaulle, Barcelona and Zurich - require further legal and statutory discussions and approvals. Sale of these three hotels is anticipated to take place in the Q3.
„This transaction is a significant step for Hilton as we continue to focus on our strategy of growing our managed and franchise business, while reducing asset ownership and strengthening our balance sheet,” Hilton CFO Robert La Forgia said. On completion of these transactions, Hilton will have sold more than $3 billion of assets that it obtained in the acquisition of Hilton International in late February 2006, and more than $4.5 billion of assets will have been sold since the company began its disposition program in 2005. Also Thursday, Hilton completed the sale of its Scandic chain to EQT Partners AB, a private-equity firm partly owned by Investor AB, for €833 million ($1.1 billion). The 130 Scandic hotels are situated primarily in Sweden, Denmark, Finland and Norway. (marketwatch.com)